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NCCI Report

Workers’ Comp Records Another Stellar Year

Private carriers reported their 10th consecutive year of underwriting profitability with a Calendar Year 2023 combined ratio of 86. It is the 7th consecutive year with a combined ratio below 90 for the workers’ compensation insurance market, according to the most-recent figures released by the National Council on Compensation Insurance.

Among the highlights:

  • Workers’ compensation premium increased 1% in 2023, reaching $43 billion and up from $42.5 billion in 2022. While the overall P&C market expanded in 2023, workers’ compensation share has decreased over the past 20 years, from nearly 8% in 2003 to 5% in 2023.
  • Workers’ compensation’s Accident Year 2023 combined ratio is 98% with prior years continuing to experience downward reserve development. Workers’ comp reported the lowest combined ratio among all lines in property & casualty.
  • The workers’ compensation reserve redundancy has grown to $18 billion.
  • Lost-time claim frequency declined by 8% in the past year, which is more than two times the size of the long-term average decline.
  • Severity changes were considered moderate for 2023 with increases of 2% for medical claim severity and 5% for indemnity claim severity.
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“The overall numbers for workers’ compensation show a financially healthy system,” says Donna Glenn, chief actuary, NCCI, adding the workers’ compensation industry has been recording steady declines in claims frequency for more than two decades. NCCI President and CEO Bill Donnell adds “the workers’ compensation system has unique features that have differentiated us from other commercial lines in terms of overall performance during the past several years. However, there are key questions ahead related to issues such as frequency change and medical cost inflation.”

NCCI says the moderate growth in inpatient cost per claim in workers’ comp is a function of a decrease in utilization of 22% since 2012, driven by a steep drop in admissions and a shift of surgeries to an outpatient setting. Hospitals have responded by raising inpatient prices by more than 50%. According to the Peterson Center on Healthcare and the Kaiser Family Foundation, since 2000 the price of medical care, including for services provided as well as insurance, drugs, and medical equipment has increased by 121.3%, while prices for all consumer goods and services rose by 86.1%.

Among other details in the latest NCCI report: payroll increased by 6% between 2022 and 2023, driven by increases in both employment and wages. Also, all NCCI states continue to approve decreases in bureau premium level in their latest filings. NCCI adds the gains were widespread in the comp industry in 2023 as nearly 40% of workers’ comp carriers achieved a net combined ratio below the industry’s 86 mark. Additionally, two-thirds of workers’ comp insurers enjoyed an underwriting gain for the year.